State Auditors Discover: P15 M overprice of multivitamins

The Commission on Audit (COA) has reportedly discovered a P15 million overprice of multivitamins purchased last year for the use in various government hospitals in Central Visayas.

This was discovered during the regular annual audit of the transactions involving the operations of the Department of Health in Central Visayas.

The state auditors, however, clarified that the alleged overpricing of multivitamins was not done by the health officials, because the procurement was made by the Procurement Service of the Department of Budget and Management (PS-DBM) in Manila.

The records showed that the PS-DBM acquired 14,560 boxes of multivitamin capsules at P1,199.12 per box containing 100 capsules each. The charges includes an additional 4 per cent service charge or a total amount of P17,459,187.20.

The state auditors were surprised when they have learned that while the PS-DBM bought each box of multivitamins at P1,199.12 the central office of the Department of Health only purchased the same product at P137 per box.

It was also reported that the same multivitamin capsules were purchased by the PS-DBM and DOH-Central Office from the same manufacturer and distributor — the Diamond Laboratories Inc.

But the personnel of the PS-DBM explained that when they purchased the multivitamin capsules they only used the unit price stated in the Agency Procurement Request submitted by the health officials of the region.

The PS-DBM argued that they believed that the approved budget contract listed in the agency procurement request were thoroughly reviewed and compared against previous purchases.

The health officials in the region explained that although there was an approved budget for the contract set for the purchase of the multivitamin capsules,  it doesn’t follow that the bid price will be the same as that of the approved budget for the contract.

According to the PS-DBM that in all public bidding activities — from pre-bid conference, opening of bids up to the conduct of post-qualification – it was always attended to by a representative from the DOH, who up to the time when the procurement service awarded the initial order of the multivitamins, did not question the cost.

But the regional health officials said while it was true that there was a representative from the DOH, who attended the pre-procurement and pre-bid conferences for the purchase of the multivitamin capsules, the said DOH representative was not present during the opening of bids as well as the awarding of the notice of awards.

The Procurement Service-Inter Agency Bidding and Awards Committee is now reportedly exerting all efforts to get the supplier of the multivitamins to restitute the overpriced amount.

Since the cost of the purchased multivitamins were bloated by almost 600 percent, the quantity bought was much lesser therefore only a few people benefited.

COA also recommended that the health officials should see to it that those who procured the overpriced vitamin capsules be made to pay such amount.

Promissory Notes

The usual practice in most, if not all, government hospitals, is that the patients or their relatives would just issue promissory notes whenever they do not have money to pay the cost of the medical services they have availed.

COA also found out that at the Vicente Sotto Memorial Medical Center there was no system that would ensure that payments arising from promissory notes totaling P2,960,890 were actually received by the hospital, because these were not entered in the books as receivables, thus, exposing government funds to possible losses.

The state auditors suggested that promissory notes should be recorded as receivables to ensure monitoring of settlements by patients or their guarantors and the billing section personnel would prepare summary of payments of the promissory notes, then submit it to the accounting section.

The administrative officer of the VSMMC explained that the execution of promissory notes by patients was management’s way of informing pay patients that not all services in a government-run hospital are free and that demand letters were already sent to those who had an outstanding obligation.

But COA said that inasmuch as promissory notes are not properly recorded as receivables, there is a possibility that payments will not be monitored because the concerned patients might pay to persons who may not be honest enough to remit payments to the cashier.

Meanwhile, another observation of COA is the failure of the VSMMC to dispose unserviceable equipment amounting to P9.4 million deprived the hospital of earning additional income that could have been used to procure new units of equipment and also exposed the properties to the risk of possible loss and prevented the hospital from utilizing the space these unserviceable equipment are stored. — /NLQ